A strong industrial base is an obligatory requirement for the perpetual growth and economic prosperity for a country. We are living in the era of globalisation and world has become a global village. Notwithstanding, its fruitful results, Pakistan also faced some adaptive negative economic shocks from Oil shock in 1970’s and recently from financial crisis 2008. To cope with such shocks we necessitate an independent economy; and no doubt Special Economic Zones (SEZs) can play an essential role in making of a strong industrial base of one’s economy, if put up in an efficient way.

There are around 3500 SEZs around the globe and employed around 66 million people. Among these 66 million, China has a share of 40 million. If China is extracting this much of benefit from the SEZs then without any doubt Pakistan have a huge potential to get rid of the vice of unemployment i.e. 3.62 million unemployed labour among 61.04 million of total labour force. The 29 proposed SEZs under CPEC is a silver lining for the economy of Pakistan, if employed efficiently.

Because of the less developed industry most of our technical labour force chooses the way to emigration and in 2016 the number of emigrants were 839,535. The SEZs can make an end to this severe issue of brain drain and the skilled labour will be employed within the border. Furthermore, there will be the exchange of labour force between the provinces which will result in narrowing the gap between the people; and the notion of “Only Pakistan” will be strengthened.

Because the less competitive locally produced commodities do not make much place in the international market, which is the reason behind our import oriented economy. We have observed the deficit of Rs 289,139 million in trade balance; this immense amount can only be contracted with the startup of SEZs. Value-added products can make a huge input to the export sector of the economy, with the product specialisation; we can give value addition to our agriculture products through SEZs. SEZs can work as a catalyst in the insulation of economy from external shocks. These zones terminate will the narrative of Pakistan’s economic dependency on Chinese economy; so these SEZs will provide Pakistan with strong industrial base and independent economy. The other good sign is that the $34 billion on energy sector under CPEC will play a vital role in the revival of domestic industry; energy shortfall was the main reason behind the shifting of the textile industry to Bangladesh and other neighbouring countries.

The most remote province Balochistan has now become the golden bird after connection of Gwadar port with One Belt One Road (OBOR) via CPEC. The geostrategic importance of Balochistan is now in consideration of all the stakeholders. The good news is that there are seven SEZs in Balochistan, which evens it out with the share of other provinces. These seven zones should be prioritised because they lie across the road network of CPEC, which are under construction. The commodities produced at these zones would have an easy access with less transportation cost to the international market, in contrast with the SEZs in other provinces. This will make our domestic industry to compete in international market. It is a geographical fact that markets establish across the roads and the road network has almost been spread in Balochistan. No doubt Balochistan has a lot of heavenly spots and tourism plays a vital role in making the mindset of the locals of that area. This should be developed with at least some basic necessities in order to make these spots as business meet up points. More than 52 % people in Balochistan lies under the poverty line and one of its reason is unemployment and especially underemployment. If China can extract more than 40 million jobs then why not Pakistan? The other thing is that when people will see the well-off educated employee, it will spark up the thrive for education; which definitely will elevate the literacy rate of Balochistan from 44%. The knowledge spillover will take place when employees from other provinces will move to Balochistan.

Unfortunately, the potential of existing SEZs is hindered due to rent seeking and kickback culture. To make these zones on track, we have to ensure the property rights of investors; property rights protection is a notable indicator of the higher concentration of FDI. In addition, rules to be made for the partnership of local investors with a foreigner to make sure the circulation of money within the border. Tax relaxation should be given to the investors in terms of sales and property tax. Zero import duty on the capital good is an easy gateway for startups. Institutional strengthening is the primary need to monitor these SEZs because the perpetuity of the previous SEZs was curbed by the rent seeking culture; there should be an independent monitoring unit consisting of a board of directors. Most importantly, the formation of special research centres are to be made, to analyse the pros and cons of each zone and suggest the specified production in each zone according to the labour force and raw material available.

The regional connectivity, which we have embarked upon the right direction, CPEC has exalted us with an ample road and railways network. After 1960’s golden era, we have another chance to take off the economy.


About Author

He is a graduate of School of Economics, Quaid-i-Azam University, Islamabad (QAU). His field of expertise is Pure Economics. Currently, he is working as a content writer at Voice of Balochistan (VoB). He has also volunteered at World Peace Organization in Research Section.

Leave A Reply